Overpayments

An overpayment is compensation paid to an employee in excess of the amount owed for a given pay period. Overpayments are legal debts to the University, and as a state agency, the University of Washington is required by law to pursue recovery in full, regardless of the amount overpaid or how the overpayment occurred. 

Washington State Constitution, Article VIII, Section 5 states: “The credit of the state shall not, in any manner, be given or loaned to, or in aid of, any individual, association, company or corporation.” There is no time limit on the collection of debt to the state.

Responsibilities

Department Responsibilities

  • Process personnel actions in Workday in a timely manner to prevent future overpayments
  • Regularly run and review payroll-impacting reports in Workday to proactively monitor for prevent overpayments
  • Report the overpayment to the Payroll Office  
  • Ensure receipt of completed paperwork from the employee for timely and accurate recovery of funds. Follow the guidance in the How to Correct an Overpayment section
  • Explain the overpayment to the employee. As part of this, the department must confirm what the overpaid employee should have been paid and answer questions to ensure employee’s understanding of the overpayment
  • Process Payroll Accounting Adjustments as appropriate

Employee Responsibilities

  • Enter time off in Workday in a timely manner
  • Review paychecks promptly and immediately notify their department and the Payroll Office of an overpayment when discovered
  • Respond to the overpayment notification in the allotted time
  • Repay any overpayments according to the overpayment procedures

Payroll Office Responsibilities

  • Process all overpayments of wages that departments identify, which includes:
    1. Ensuring the repayment is applied accurately to ensure correct wages and taxes in Workday
    2. Preparing a net calculation, as needed
    3. Responding to questions that departments are not able to address (ie. tax related questions)
  • Ensure that the University of Washington follows state policies and laws pertaining to the overpayment process. This may include following up with employees on failed payment arrangements through a series of letters and/or payroll deductions and/or collections referral as outlined in the RCW

Policy

The Payroll Office is committed to ensuring timely and accurate repayment of all overpayments, in alignment with its fiduciary responsibility to the State of Washington, and the University of Washington, as defined by WAC and RCW regulations, regardless of the timing, cause, or amount owed.

  1. If an overpayment can be corrected immediately, the department should contact the Payroll Office to cancel pay or pull the direct deposit. If neither is possible, the department should reach out to the Payroll Office if a net calculation is appropriate for immediate repayment.
  2. Once an overpayment has been identified, it is the responsibility of the employee’s department to notify the employee. Please see the Notification Process section below for the notification procedure for active employees or separated employees.
  3. All active employees must repay overpaid amounts. Repayment can be in the form of a paycheck reversal, timesheet correction, absence correction or via payroll deduction as a total gross repayment or in installment payments. For installment payments, it is the University of Washington’s Payroll Office Policy for the standard minimum payment amount to be 10% of the overpayment amount, or $50, whichever is greater. All repayment agreements are subject to review when an employee’s status with the University of Washington changes, or their repayment plan falls below the minimum thresholds. Please see the Repayment Options section below for more information on the repayment options.
  4. RCW 49.48.200 provides that any overpaid amount still outstanding at termination shall be deducted from the earnings of the final pay period, which may lower the annual leave, and/or compensatory time payoff amount.
  5. When an employee has not responded within 30 calendar days of the notification date, additional collection actions may be started. The overpayment may be referred to an outside collections agency or may result in involuntary payroll deductions from the employee’s paycheck(s). Please see the Collections Process section below for more information.
  6. Crossing tax years may impact the overpayment repayment amount. Refer to IRS Publication 525, Taxable and Non-taxable income for further clarification.
  7. For employees covered by a collective bargaining agreement, refer to your applicable agreement for repayment policy information.